Today’s news of disappointing earnings pushed down PepsiCo Stock, but the stock has been under pressure for a few days. I did Put Selling on PepsiCo Stock and sold 3 naked puts for Nov at $70 strike this morning around noon and I may buy 500 shares of PepsiCo Stock for a possible bounce over the next day or two at most. (PepsiCo Stock symbol is PEP)
Here are the technical details I have watched with regards to PepsiCo Stock.
PepsiCo Stock Technical Readings
1) On Sept 12 the stock hit $70.00 and pulled back up. It has three times lately broken $70.00 again. In a more volatile stock this would indicate that it is going to move lower. PepsiCo Stock though is widely held by institutions just like Coca Cola Stock. This therefore could be a bit of a buying opportunity for a bounce back to $71.00. Any further breaks at $70 though could see the stock pull back. There is not a lot of support at $70 for PepsiCo Stock. The put to select for my trades will be $67.50 if the $70 breaks which is why I did just 3 at $70 this morning. I will probably not hold these puts to Nov options expiry but close them if there are decent profits within the next couple of weeks.
2) The Ultimate Oscillator is oversold and has been oversold on and off for the past few weeks on PepsiCo Stock. It is now extremely oversold which is signaling a possible bounce, which is why I am thinking of buying shares.
3) MACD gave a buy signal on the stock on Oct 3 and then a sell on Oct 11. But MACD is almost neutral after the Oct 11 sell. The stock could bounce from here.
4) The slow stochastic is excellent for timing as it looks out beyond a day or two. It is slightly biased to the upside with a K reading of 27.25 and D period at 23.31. Again there is not a huge amount of selling pressure so PepsiCo stock could move back higher and the signal from the Slow Stochastic would be correct. The last time the Slow Stochastic was this low it gave the same UP signal and the stock follows through. I am expecting the same this time.
PepsiCo Stock Outlook Summary
The Technicals show there is not much selling pressure. Indeed most indicators point to a slight bounce back. Based on this I sold the 3 naked puts and am now preparing to consider buying 500 shares of stock.